The Study Of The Effectiveness And The Impact On China Of American Quantitative Easing Monetary Policy

In 2007, the outbreak of the United States subprime mortgage crisis triggered a systemic financial risk and ultimately evolved into the global financial crisis. The crisis have serious impact on each economy of the world, and the central banks also introduced various policy measures to cope with the severe economic downturn. Due to the destruction caused by the crisis on the economies is comparatively severe, conventional monetary policy is difficult to play an active role in regulating. Against this background, the Federal Reserve introduced the unconventional quantitative easing monetary policy firstly during the crisis, followed by Japan, the United Kingdom, the Euro area and other major economies, which also set off for the quantitative easing monetary policy research boom. The United States is the world’s largest economy, and the financial crisis broke out in the US, so the damage suffered by the American economy is the most intense. Study on American quantitative easing monetary policy, not only allow us to accurately recognize the validity of the quantitative easing monetary policy, but also help us to fully grasp the future trend of the world economy. At the same time, understanding the drawbacks of the policy and the influence on our country, will provide important theoretical and practical support for the good healthy development of China’s economy.First, the paper reviews the many relevant literature at home and abroad about the quantitative easing monetary policy, Starting from the two aspects of theory and empirical, collates and summarizes the view of the quantitative easing monetary policy studied by the domestic and foreign scholars in recent years, paving the way for the analysis of this paper.Secondly, the paper focuses on the theoretical study of quantitative easing monetary policy and elaborates on the concept, the operational tools and transmission mechanism of the policy. The paper also compares the quantitative easing monetary policy with the traditional monetary on the policy objectives, the operating tools, operating period and the transmission mechanism of four different aspects, providing a theoretical basis for this paper.Thirdly, combined with the implementation background of the Fed’s three quantitative easing monetary policy, the paper elaborates the practice of American quantitative easing monetary policy. Then according to the actual situation, the effectiveness of quantitative easing monetary policy and its impact on China are described and analyzed by the paper.Fourthly, the paper selects the US broad money supply, the US consumer price index (CPI) growth rate, the US industrial production index growth rate, the United States registered unemployment rate, Chinese consumer price index, Chinese broad money supply of the six indicators, and applies VEC model and VAR model to quantify the effectiveness of the Fed’s three easing monetary policy by empirical analysis, and while analyzes the effect of American quantitative easing monetary policy on Chinese economic by empirical analysis.Finally, based on the aforementioned theoretical and empirical analysis, the paper concludes that the Fed’s quantitative easing policy played a positive effect on improving market liquidity, fighting the deflation and promoting the output. While the policy recommendations are proposed including developing a flexible and prudent monetary and fiscal policies, accelerating the process of internationalization of the RMB, handling international hot money flows properly in order to reduce the impact on Chinese economic by American quantitative easing monetary policy.